Pallet Pooling: EPAL Interviews Stefan Zeltner of Heineken

Stefan Zeltner, age: 54 years Chief of Brewery Logistics at Heineken Switzerland AG Employed at Heineken for 9 years In the logistic sector since 1990

Mr. Zeltner takes care of the logistic branch. It starts at the filling and ends with the shipping to logistic centres and to the retail and wholesale markets.

Q: Mr. Zeltner, do you use pallets except from EPAL pallets?

No, in Switzerland one counts with full trust on the very good trading system of the EPAL-pallet. In the beverage branch exists no market to apply other pallets. Other pools don’t have a chance here: My opinion is, that closed pools for loading equipment can only exist in the long run if they are used only for one kind of goods and not for different goods. As soon as they have a different use, they “disappear” and make big financial damage.

We had a huge amount of pallets standing around at our brewery sites before. Caused by the weather we had enormous damage especially during the winter months until spring, because of rotting. The pallets were standing in the way and used resources, which couldn’t be used in the concern. Again and again we had to rebuy compensation for those pallets, which didn’t fulfil our requirements. The damage was at times 10 to 20% of the pallets stored for months. Today we got a contract with a service provider providing us with the needed pallets just in time, within 24 hours.

Q: This service causes extra cost for your company, doesn’t it?

Yes, of course. Our service providing partner “Holliger-Palettenpool” also needs to cover their expenses, but I wouldn’t necessarily use the term cost! The expenses are compensated by the economisation, so it doesn’t make additional costs.

Q: How is that possible?

Before this rearrangement, we always had 6,000 to 10,000 pallets at our various sites in store. Today there are no pallet piles in our brewery storage anymore, except from a buffer for 1 to 2 days. Our production is predictable. We know the exact number of pallets we need. Because of no storing of the mass of pallets and because of no work for repairing and sorting, we get a lot of advantages. Saving internal expenses, we can eliminate the higher external costs.

Q: Does this mean Heineken doesn’t own pallets anymore?

Still, Heineken Switzerland has got a small asset of EPAL pallets and they are written down in our account list. We order supply at our service provider, they cater it and we transfer the amount. The markets send the pallets back and we cancel them out of our accounts. Four per cent of the pallets are getting replaced. Each time we get a report from our retail partner about defect pallets, we insert the appropriate amount.

Q: Do you buy new pallets only, because beverage is so heavy?

Not at all, since we are working with this service provider, Heineken only buys used pallets. We can trust hundred per cent the checked and delivered quality. We would only deny fully black or dirty pallets. It doesn’t match to the image of the beverage industry and to our customers. But for them I know that these pallets will get sold at the construction material market. There are no lighter materials being transported and that for sure.

Usually you can separate used pallets into three qualities:

White pallets: Almost without visible colour change, preferred at the hygiene and grocery industry

Grey pallets: You can see that they are used, applicable for most of recipients. Their carrying capacity and quality is not worse than the carrying capacity and quality of new ones pallets.

Black pallets: Most of the time they go to the construction material market, the colour usually doesn’t matter at this branch, fully automatic high bay racking are rather seldom to be found.

Q: How does the cooperation with the service provider work?

As I said, we order the needed amount of EPAL-pallets and get them. The markets directly send the empty pallets back to our service provider. At our other logistic and/or trading partners our in-house vehicles bring the EPAL-pallets back. Of course they get also checked by our service provider. In all cases only the best quality is allowed to be catered to our assembly lines.

Q: Why is it so important that no defect pallets are getting inserted into the production circuit?

Our products being loaded on the EPAL-pallets right after the filling and stay there until the unloading at the costumers or the consignment. Before it happened in some cases that not checked pallets with bad quality weren’t sorted out, instead they were stored in the brewery high bay rackings, so that the pallets were literally falling apart in the high bay rackings and were constraining the logistic for several hours. This also partly cost us a lot of money for repacking and cleaning, we are saving these costs today, too. On conveyor belts and all automatic storage systems you can use only blameless pallets. Broken or missing bottom boards would cause breakdowns and would result in costs in these systems again.

Q: Isn’t it a longer way, if all pallet movements go via the service provider?

No, exact the opposite. Our Service provider is strategically conveniently situated between our production sites, the distribution centres and perfectly at the transportation ways of our cargo service. The conveyances save half the way between the filling and regional distribution centres (RDC). The whole pallet handling, more precisely our intern pallet transports got clearly less. There is no circular back and forth in our brewery stockings anymore.

Q: Where and how do you transport the products of the Heineken label?

We supply whole Switzerland with our beer produced and branded in Switzerland. We or rather our cargo service transport most of the goods via train to own depots all over Switzerland. All companies pay “capacity-linked levy on heavy goods vehicles” 1 CHF (0.79 EURO) per kilometre for transports on the road. To transport fast and effective on train and truck, our partners and service provider count on exchange platforms (Intermodal Container System) getting loaded and shipped by them at our place. On the way back we do it reverse. This is the only way to work economically and fast.

Q: What do you wish from the EPAL-pallet for the future?

The pallets should be clearly identifiable per RFID or maybe in combination with a barcode, so that stocking and releasing from stock of fully packed pallets gets easier. But you shouldn’t prefer systems which are expensive or developed for special companies only. In Switzerland was a merchant who wanted to accept goods provided with a special code only. This system was rejected from a lot of producers. Obliging all users of EPAL pallets, we need to aim for a bigger solution.

Q: Do you wish additional services from your service provider?

The situation is almost perfect now. The service is connected with cost. At this point it would be helpful if we as a partner get numbers and/or survey data about assignment and reduction of costs, which definitely accrue. It would be easier to convince the relevant points in the companies of the positive effects of this collaboration. Everybody can see that there aren’t huge pallet piles on brewery sites anymore, using space and money. Our pallets are where they belong – on the way to our customers.

Q: Could you imagine that more service providers and their collaboration in a network could be an improvement of the transport system?

Yes, ´short ways of transport` is the most important thing in the business right after ´as less as possible movements`. Both of these challenges would be easier to handle than today if there would exist a network of providers around the EPAL-pallet. Reducing empty freights and decreasing production and logistic breakdowns, the environment will be conserved.

Q: Are you interested in other pallet sizes?

Our customers and we are talking about the “half pallet” in the branch of “Point of Sale”. In this sector we could easily transport specials and present it. The half pallet should be factory compatible. That means: they should automatically move in our filling and transport lines just like the EPAL-pallet does, they need to be able to go on roller conveyors without producing problems. In my point of view, the quarter pallet is difficult to use in the beverage branch. “Mrs Smith” from the small shop can’t use the forklift to bring the goods from the delivery area to the point of sale. What can she do? “Mrs Smith” takes of the goods, carries the display and the quarter pallet to the destination in the shop and arranges everything again. This isn’t the proper way, is it?